Florida justices hear nuclear plant cost appeal

BILL KACZOR, Associated Press

Published 12:33 PM ET Sun, 11 Nov 2012
The Associated Press

TALLAHASSEE, Fla. -- A law letting utilities charge customers now for future nuclear reactors even if they never get built fails to provide regulators with "adult supervision," a lawyer told the Florida Supreme Court on Thursday.

Gary Davis, representing the Southern Alliance for Clean Energy, urged the justices to declare the law an unconstitutional delegation of authority from the Legislature to the Public Service Commission. The high court did not immediately rule.

Davis made his argument in the environmental group's appeal of a commission order that let Florida's two largest electric utilities charge customers $282 million for upgrading existing nuclear plants or building new ones.

Expenses normally cannot be passed on to customers until power plants go into service, but the Legislature made an exception for nuclear reactors in the 2006 law. It's designed to encourage the expansion of nuclear energy.

The law lets the commission members decide whether passing on the nuclear costs to customers is prudent and reasonable, but Davis argued those standards are insufficient and leave regulators with "unbridled discretion." He noted that utilities have been unwilling to spend their own money on the nuclear projects, some of which have been plagued by cost overruns and delays.

"It doesn't provide any adult supervision over what rates are ultimately going to be charged to the consumers of the state of Florida," he said.

Each utility was represented by a former Supreme Court justice, Raoul Cantero for Florida Power & Light Co. and Stephen Grimes for Progress Energy Florida.

They said arguments by Davis and Brian Armstrong, a lawyer for the Village of Pinecrest, went beyond the only two issues in the case. That's whether the utilities intend to go forward with the proposed nuclear projects and if the Legislature's delegation of authority to the commission is constitutional, the ex-justices said.

"It's almost like they're trying to make it a referendum on whether it's a good idea or not," Grimes said. "That's not before this court."

Cantero said the law provides enough guidance according to precedents set by prior Supreme Court rulings. Both maintained that their clients have confirmed their intent to go forward with the nuclear projects as long as they remain feasible. Davis challenged those, claims saying the commission relied on "squishy kinds of activities" to determine the utilities' intent.

Justice Charles Canady said the law is a response to very complex and dynamic circumstances.

"Things change, and the recognition that some circumstances may occur, which would cause the plans to change is just a recognition of reality," Canady said as he questioned Davis.

Justice Barbara Pariente, though, said the nuclear cost recovery law seemed like a "win-win situation" for the utilities because if plants aren't built they don't lose anything while customers do.

Grimes acknowledged that utilities stopped building nuclear plants decades ago for one reason or another.

"Maybe Three Mile Island?" Pariente asked.

The partial meltdown of a Three Mile Island reactor in 1979 is considered the worst commercial nuclear power plant accident in U.S. history.

The commission approved the full $196 million sought by FPL, but cut Progress Energy's $141 million request to about $55 million.

Cantero said the nuclear projects are costly but eventually will save consumers billions by reducing fuel costs.

"The statute was enacted because the utilities don't have the money and can't borrow billions of dollars, so they needed incentives," Cantero said. "That incentive is working."